Normally changes in the patent law impact a small number of patent lawyers. However, the America Invents Act (AIA) was called “one of the most significant legislative reforms to the patent system in our Nation’s history,” and it has certainly lived up to its billing. The law changed both when to file a patent and provided new ways to challenge them. In-house counsel, not just patent lawyers, who understand the new regime can put themselves at a significant advantage.
The race goes to the swiftest
Beginning March 16, 2013, the United States moved to a first-to-file patent system where a patent is awarded to the first inventor to file a patent application. This system replaced the old first-to-invent patent system that awarded the patent to the first person to actually invent the idea. This new first-to-file system has significant implications for protecting your intellectual property; in-house counsel must be tightly integrated with research and development departments to identify new inventions and quickly move them to patenting or risk losing the invention to an earlier filer even if your company invented the idea first.
In-house counsel can take several practical steps to secure an earlier filing date. First, in-house counsel should inform their inventors about the change in the law and the importance of early disclosure. Under the prior system, inventors had the incentive to take their time, complete their work and then disclose the invention after the full scope and value of the invention was realized. Now, however, organizations must educate and incentivize their inventors to disclose their ideas as quickly as possible, in some cases before they have been fully developed.
Second, counsel should review their internal processes for disclosure and monitoring of new inventions so that there is a quick and easy path from research and development to review for patent protection. This can range from embedding patent counsel within the research and development teams to creating a dedicated email address for disclosure of potential patentable ideas that is monitored by a patent attorney. In any event, the patenting process will be more efficient if you ensure that patent counsel are informed about your business and are engaged as early as possible.
Patent counsel can also help in ensuring you are first to file. For example, they can file provisional patent applications which are shorter and less formal while still securing an earlier filing date. If new matter is developed, additional provisional applications can be filed incorporating it. Where foreign patent rights are not a concern, inventors can also secure an earlier effective filing date by publicly disclosing the invention, although the application must be filed within one year or you may lose your ability to file for a patent. Again, in-house counsel should carefully educate inventors about the proper ways to disclose and document their activities.
Potent new challenges to patents
Another major change in the AIA is the addition of several new ways to challenge the validity of a patent through trial at the Patent Office: the Inter Partes Review (IPR) and Covered Business Method Review (CBM). Generally, an IPR proceeding may be requested against any patent, subject to certain time restrictions. Review in an IPR is limited to showing that the invention was already publicly known through documents. CBM proceedings can only be requested for patents relating to the “practice, administration, or management of a financial product or service,” but the challenge can be based on any ground.
Both IPR and CBM have a number of very significant differences from traditional validity defenses in civil litigations. First, the entire proceeding typically concludes within one year of filing (although there is a six month grace period for good cause). Second, the litigation style proceeding (which allows for limited fact and expert discovery) is conducted before the Patent Trial and Appeal Board (PTAB), a panel of patent administrative judges unlike federal district lay juries and judges. Third, the party challenging the patent only needs to prove invalidity by a preponderance of the evidence, as opposed to the higher clear and convincing standard in civil litigations. Finally, the PTAB will interpret the patent claims with their “broadest reasonable interpretation,” while in civil litigations claims are interpreted with their “plain and ordinary meaning.”
Recent statistics from the Patent and Trademark Office confirm that IPR and CBM have been very effective ways to challenge patents. Through mid-April 2014, 1,035 IPR petitions were filed and 156 CBM petitions were filed. So far this year, the PTAB granted the petition and initiated proceedings for 79 percent of the IPRs and 85 percent of the CBMs. Moreover, in an analysis by Kenyon and Kenyon, for all proceedings that advanced to final determination only 13 percent of the patent claims survived in IPR proceedings and no claims have survived in CBM proceedings.
There is one downside to consider before requesting review. For any claims in the patent that do survive, petitioners will be prevented from later relying on any invalidity argument that either was, or reasonably could have been, raised in the proceeding. So before filing a petition, in-house counsel should have a good understanding of the relevant prior art and consult with litigation counsel to understand how a patent challenge may shape any future litigation.
The AIA has brought many significant changes to patent law. In-house counsel must be aware of these and should ensure that their patent strategies and procedures take full advantage of the new law.